Hong Kong’s voracious apartment investors appear to be taking a breather as a Deutsche Bank forecast of collapsing property prices and this week’s expected interest rate increase in the United States are finally beginning to weigh on buyers to give them cause for pause.

A mere 80 units were transacted as of 6pm on Sunday out of the 206 offered in the third batch of apartments at Victoria Skye, developed by K&K Properties at the old Kai Tak airport site in Kowloon, even though 2,300 buyers had registered their interest. The first lots to sell were the smallest units that involved the least upfront payment, agents said.

“Most one- to two-bedroom apartments that involve smaller lump-sum payments were sold out first,” Midland Realty’s residential chief executive Sammy Po Siu-ming said. “Larger flats with higher prices will take more time for decisions [to be made].”

Hong Kong’s residential property prices, already the world’s highest by square footage, will likely decline by nearly half over the next 10 years as a rapidly ageing population combines with a rising supply of new apartments to dent demand, according to Deutsche Bank’s report last week.

The Federal Reserve has signalled it will raise rates during its June 14 meeting, an action that will be followed in Hong Kong to keep the city’s monetary policy in lockstep with US policies.

Some property buyers were also turning more cautious because they had been deterred by developers’ aggressive pricing, Centaline Property Asia-Pacific’s residential vice-chairman Louis Chan Wing-kit said.

At Victoria Skye, prices have risen 16 per cent in two weeks between the first batch of units released for sale and the latest batch. The average price of the latest batch, located on higher floors than earlier batches, was HK$21,099 per square foot after a discount of 18.5 per cent.

K&K generated more than HK$4.3 billion (US$551.4 million) in sales from 494 flats in the first two batches. The latest batch, comprising units ranging from 266 to 1,190 sq ft, was being sold at between HK$5 million and HK$33 million.

The developer only offered buyers a second mortgage of 25 per cent of the apartment’s value. The 30-year term loan will be offered at 2.5 per cent below the prime rate for the first 24 months and will match the prime rate afterwards.

“It will take some time to accumulate pent-up demand for the next round of sales again,” Po said.